Growing demand for electricity in China is going to increase power generation beyond the resource-rich Northern and Western regions of the mainland, benefiting independent producers, upstream gas players and copper companies, according to Macquarie Securities.
“We believe that from the second quarter of 2012 going into 2013 we will see a gradual increase in energy demand in China," Adam Worthington, Head of Regional Utilities, Renewables and Coal, Asia, for Macquarie Securities told CNBC’s “
China is struggling to distribute power from the North to the demand centers in the South, which “means that they are going to need more primary energy down in those areas, which comes in the form of more local generation, such as coal and gas power generation,” Worthington added.
This in turn will benefit companies such as China Resources Power , PetroChina and Jiangxi Copper , saysMacquarie Securities, which has a buy rating on these stocks.
PetroChina, according to the brokerage, will benefit most from the increased demand for gas power, while Jiangxi Copper is expected to benefit from the increased demand for wires for transformers.
Macquarie Securities has increased its 2013 earnings per share (EPS) estimates for independent power producers by 8-10 percent and the 2014-2015 EPS estimates for equipment stocks by 3-5 percent.